Coke is a solid carbon fuel and carbon source produced from coal that is used to melt and reduce iron ore. Although coke is an essential part of iron making and foundry processes, currently there is a shortfall of 5.5 million tons of coke per year in the United States. The shortfall has resulted in increased imports and drastic increases in coke prices and market volatility. For example, coke delivered FOB to a Chinese port in January 2004 was priced at $60/ton, but rose to $420/ton in March 2004 and in September 2004 was $220/ton. This makes clear the likelihood that prices will remain high.
Indiana is home to roughly 22% of the domestic base steel production for the United States. One essential raw material needed by this industry is coke. Current 2005 forecasts indicate that the United States will produce 11,500,000 net tons of coke, but will require 17,000,000 net tons for blast furnace, foundry, and related uses. At present, little or no Indiana coal is being used for coke production. In 2002, Indiana's steel industry used an estimated 10.7 million tons of coal. Of this, approximately 8.1 million tons was used for coke production. Essentially all of this coking coal comes from Kentucky, West Virginia and Virginia. The significant shortfall of needed coke has placed an enormous strain on Indiana's steel industries.
FIG. 1(a) depicts the influence of cost factors and linkages in the market. In general, captive coke plants supply their excess coke to the furnace coke market with remaining supply from merchant plants and foreign imports. Furnace coke produced at captive coke plants and shipped directly to integrated iron and steel mills owned by their parent companies do not directly enter the market for furnace coke. Environmental compliance costs incurred by captive, or “in-house”, furnace coke batteries indirectly affect the furnace coke market through price and output changes in the steel mill products market.
One metric ton of coal typically produces 600-800 kg of blast-furnace coke and 296-358 m3 of coke oven gas. From preliminary results it is estimated that from 0.1-0.25 barrels of liquid transportation fuel could be produced from each ton of coal used in the coking process. Currently Indiana uses approximately 8,000,000 tons of coal per year for the coke production. Use of Indiana/Illinois coal would also provide a financial incentive to the steel industry since Indiana/Illinois coal is considerably less costly than current metallurgical coal. With a blend of from 20-40% Indiana/Illinois coal significant coal cost reductions could be realized.
As the fraction of imported coal increases there will be additional pressure placed on coking coal supplies. Some embodiments of the present invention include technology to use Indiana and related types of coal to produce coke could supplement the coal supply for coking purposes and enhance the future market for such coal.
The particular mix of high- and low-volatile coals used and the length of time the coal is heated (i.e., coking time) determine the type of coke produced: (1) furnace coke, which is used in blast furnaces as part of the traditional steelmaking process, or (2) foundry coke, which is used in the cupolas of foundries in making gray, ductile, or malleable iron castings. Furnace coke is produced by heating a coal mix of 10 to 30 percent low-volatile coal for 16 to 18 hours at temperatures of 2,200° F. Most blast furnace operators use coke sized between 0.75 inches and 3 inches. Foundry coke is also produced by heating a mix of 50 percent or more low-volatile coal for 27 to 30 hours at temperatures of 1,800° F. Coke size requirements in foundry cupolas are a function of the cupola diameter (usually based on a 10:1 ratio of cupola diameter to coke size) with foundry coke ranging in size from 4 inches to 9 inches. The longer coking times and lower temperatures for foundry coke results in a longer life of these batteries.
Competition from China also will increase pressure on domestic coke production facilities. China presently has capacity to produce 208.73 million metric tons of coke per year. Of this 173.73 million metric tons is from slot ovens and the remainder from bee hive ovens. In 2004 China produced 193.7 million metric tons of coke and 50 million metric tons was exported. Currently 180 coke ovens are being constructed in China with a combined production capacity of 60 million tons.
The price volatility experienced recently in China is a result of supply and export policies. In 2001 the cost of coke was $80/ton FOB to a Chinese port. In 2040 it was $410/ton. Currently it is $200/ton. In 2002 Chinese government decreased the number of coke export licenses to meet growing demand. It is anticipated that prices could stabilize at the $200/ton level. This would provide a clear incentive for the construction of additional coke production capacity.